Investors thought Thursday would be a big up day for stock markets, given the positive news from the world's largest producer of artificial intelligence-related (AI-related) semiconductors. Yet, early gains evaporated quickly, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) ended up leading the S&P 500 (SNPINDEX: ^GSPC) and Dow Jones Industrial Average (DJINDICES: ^DJI) downward fairly sharply.
Index | Daily Percentage Change | Daily Point Change |
|---|---|---|
Dow | (1.08%) | (374) |
S&P 500 | (1.35%) | (60) |
Nasdaq | (1.87%) | (257) |
Data source: Yahoo! Finance.
After the closing bell, a couple of stocks lost even more ground following the release of their respective quarterly financial reports. Marvell Technology (NASDAQ: MRVL) showed that not every chipmaker is benefiting equally from the AI revolution, while Nordstrom (NYSE: JWN) was unable to convince investors that it is immune to the challenges hitting the retail sector right now.
Marvell keeps chipping away
Shares of Marvell Technology dropped another 4% in after-hours trading late Thursday, following a 7% decline in the regular trading session. The maker of semiconductor chips reported fiscal second-quarter financial results for the period ended July 29 that showed the different conditions various parts of the semiconductor space are experiencing right now. Moreover, Marvell's results lacked the wow factor some investors seemed to want to see.
Marvell reported a 12% drop in revenue year over year to $1.34 billion. Adjusted net income was down an even steeper 40% from year-ago levels to $290 million. That worked out to adjusted earnings of $0.33 per share, which, although down sharply from the previous year's fiscal second quarter, nevertheless came in slightly better than some investors had anticipated.
Yet, Marvell CEO Matt Murphy had a message similar to that of chipmakers that saw much healthier growth trends. Murphy pointed to accelerating sequential revenue growth he anticipates will accelerate in the near future. AI and cloud infrastructure demand are driving this acceleration, and the need for AI applications is likely only to grow for the foreseeable future.
Projections for fiscal third-quarter revenue of around $1.4 billion and adjusted earnings of $0.35 to $0.45 per share would be a nice step forward for Marvell. However, it doesn't imply a paradigm shift in Marvell's business, and unfortunately, that seems to be the standard by which most chipmakers are currently being judged.
Nordstrom isn't getting a big bounce
Meanwhile, shares of Nordstrom were down 3.5% after hours following a 4% drop in the regular trading session. The upscale department store retailer's fiscal second-quarter financial report for the period ended July 29 showed continued weakness in the business.
Nordstrom's financial metrics were mixed. Revenue fell 8.3% year over year to $3.66 billion. However, net income did rise 9% from year-ago levels to $137 million, producing earnings of $0.84 per share. That compared favorably to $0.81 per share in adjusted earnings in the prior-year period.
Several factors hit Nordstrom. The winding down of its Canadian operations, combined with the timing of the company's annual Anniversary Sale that pushed some of its revenue into the third quarter, hit sales growth by nearly five percentage points. Moreover, the namesake full-price Nordstrom line of stores took a bigger hit than the discount Nordstrom Rack division, with sales falling 10.1% for Nordstrom but just 4.1% for Nordstrom Rack.
Nordstrom reaffirmed its full-year 2023 outlook, anticipating a 4% to 6% drop in sales and adjusted earnings of between $1.80 and $2.20 per share. Yet, shareholders still seem anxious about the health of the consumer and the ability of the department store retailer to bounce back once the economy starts moving forward again.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.